Queensland’s economic forecast is looking better than predicted since this year’s budget with strong coal royalties giving treasury coffers good news this Christmas.
The mid-year economic review shows the state’s debt won’t be as high as predicted this year but is still on track to hit $81 billion by 2020.
After taking over the portfolio from Curtis Pitt in a cabinet reshuffle, new Treasurer Jackie Trad’s first Mid Year Fiscal and Economic Review (MYFER) is forecasting a net surplus of $485 million, three times higher than the budget forecast.
It comes off the back of record export figures, and strong resources royalties with the price of coal not dropping as expected.
Coal royalties for the year are now expected to be $3.164 billion, which is $414 million higher than forecast six months ago.
“The price of coal is up which means royalties are up and as a result the Queensland budget has done much better,” Ms Trad said.
However, while Queensland’s budget bottom line is looking rosier in the short term, thanks mainly to coal royalties, surpluses will remain relatively modest and there’ll be no major reduction in debt.
Surpluses ranging from $165 million to $531 million are also predicted for the following years.
“These surpluses are working for Queensland, reducing the need for borrowing and going towards our growing infrastructure program,” Ms Trad said.
Debt to reach $81 billion by 2020-21
Total government debt in 2017-18 is now expected to reach $71.2 billion — almost $800 million less than the June forecast.
However, the MYFER shows that debt is still on track to reach nearly $81 billion by 2020-21.
“The borrowings are down, we are predicting less borrowings over the forward estimates than we were in the June budget,” Ms Trad said.
“Clearly our debt reduction plan has worked and worked quite significantly and we will continue to follow through with that and adhere to our principles.
“But there is further work that we are going to be doing from this time until the next budget to look at our debt position.”
Tax revenue to grow under new taxes
Taxation revenue will grow as expected after Labor announced four new taxes during the recent election campaign.
The increases in land tax, foreign duty, premium car duty and online betting will earn an extra $491 million over three years from 2018-19.
Another billion dollars in public sector savings will go towards Labor’s election promises.
“Where there are duplicate programs all with the same intention, amalgamating them, finding efficiencies, is particularly a good way of reprioritising some of the excesses within government,” Ms Trad said.
Economic growth forecasts are unchanged in the MYFER: 2.75 per cent for 2017-18 and 3 per cent for 2018-19.
But the 1 per cent growth in employment has been upgraded to 2.25 per cent.
“In summary the MYFER shows that we have fully funded our election commitments, that surpluses are up, that debt is down and we will continue to lead the nation in strong jobs growth,” Ms Trad said.
But opposition spokesman for treasury Tim Mander said it was a typical Labor budget document.
“Spending is up, taxes are up and the debt continues to increase,” Mr Mander said.
“This government has benefited by good luck rather than good management, by the increase in coal royalties.”